How to buy shares

Updated on September 29, 2010

Individuals no matter how rich they
may be are not allowed access to the stock market. You therefore need the
services of a stockbroker in order to buy and sell shares in the stock market.
Stockbrokers are paid a commission each time you buy or sell shares in the
market. This commission though is usually regulated and very small. So this
should not cause any panic. To therefore buy shares through the market:

1.You must register with a stock broking firm who will represent you
in the stock market

2.The stockbroker will open for you a CSCS account

3. You then place an order by paying to your stockbroker the monetary
value of the purchase

4. You will then tell your stockbroker which company’s shares to buy
for you or ask for his advice on which to buy.

On completion of the transaction, he
issues you a CSCS contract note containing details of the transaction.

How much do you need to buy shares?

Unlike what many have been told in
the past, it does not only take $500, 000 or more to begin to invest in shares.
With as little as $50 or more, you can begin to invest from time to time and
watch your fortunes grow. All you need is an investment plan that would enable
you to be consistent in your investment either on a monthly, weekly, quarterly
basis or whenever you have money on you.

Generally, buying shares takes two
major dimensions and include:

Initial Public Offer (IPO):
The shares here are coming to the market for the first time and are announced
using various medium such as radio the, television, and posters. The forms are
usually available in the company’s offices and issuing houses.

Stock Exchange Market: This
is a secondary market where buyers and sellers of securities meet through their
stockbrokers to effect transactions. It is an intermediary organization between
fund users and suppliers of capital. It provides an arena where mutually
satisfactory prices are determined for the secondary market.

Which one should be preferred?

Both the Initial Public Offer
(IPO) and the Stock Exchange Market are goodavenues to buy
shares but buying through the Stock Exchange Market can be preferred to Initial
Public Offer because of the following reasons:

1.
It will be easier to sell the shares bought through the Stock
Exchange Market that an IPO certificate

2.
The problem of having to secure a certificate is eliminated

3.
The minimum purchase for an IPO may not be affordable to
low-income investors. This problem is taken care of by buying through the Stock
Exchange Market.

4.
IPOs are not always available for purchase, but shares are always
available for sale on the Stock Exchange Market.

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